402 The Trouble With Practice Management Systems

Today we're talking about the trouble with practice management systems as we head into 2025. They are not without their shortcomings, far from perfect, but a necessary evil that's too extreme. PMs are great, but in today's form they're they're lacking some very important things. Also, the biggest mistake I see with folks using practice management systems and how to overcome that and the eternal struggle of the fear of putting yourself out there, of of resolving to be be less of a lurker. Put stuff out online when the when there's just a whole bunch of weirdos and meanies out there. How do you get over that? We're going to talk about it today on a Q and a Friday installment of Jason on Firms. Q and A Fridays. The best day of the week, gang. You know why? Because it's all based on real questions from the real people. Drop those questions down in the comments if you have them. Other people have them. When we have the conversation, we all get smarter. This was a question from Firelands Accounting. I'm going to generalize it a bit, but the question was Thoughts on Financial Sense, specifically for tax intake and future tools and where they are headed. I will generalize to practice management systems in general and their capabilities for tax intake. And I would say the same about managing month end closes. Here's my thoughts is they suck at it. They they really do like Practice management systems do not do a compelling version of tax intake these days. They do not do a compelling version of month end close automation. Let's see, you have Client Hub and you have Financial Sense who do like a version of uncategorized expenses built into the practice management system. That's cool. It doesn't go as deep as Uncat, which is a standalone tool for for managing uncategorized transactions. Uncat Unc A if you do bookkeeping, it's worth checking out. We've done some demos on the main YouTube channel of it. But the reality is practice management systems, what they're doing right now is what was peak workflow like three years ago? And so practice management systems have always been framed as like hey there they are an accounting firm's best friend. We when it comes to workflow. And they are very good at managing the flow of work throughout an office, managing documents, now managing projects and seeing where those projects are. They're getting better at reporting. Historically cloud PMS were not great at reporting, but a lot of them now are getting pretty good with that. And so if you look back at what everybody would have said like 36 months ago was the peak of what's possible today. Most practice management systems, if you've been paying attention, they're starting to look pretty similar. Right? Right. Like they've kind of been copycatting, like looking pretty samey, adding the more or less the same feature sets, some better than others and some at a faster rate than others. But PMs have never been more samey than they are right now. And what they are today is a reflection of what I would say was what peak workflow was a few years ago. But in that few years what we call workflow and how far workflow automation can go has changed. And this isn't the fault of practice management systems. If anything, it's the fault of like these, this new sort of crop of tools that we have that are taking workflow farther than ever before. And on the tax side it is the tax intake providers, you know, Sorban, Stanford, Tax Safe Send, they got acquired by Thompson Reuters though, which is a big bummer on the month end close automation side. Really it's, it's keeper that's leading the way and it, it all kind of comes back to what, what is like the rubber banding value but like simultaneously like impossibility that is all in one software. Because it, it is not a hot take to say I want one tool to do everything. Of course you do, we all do. But what I actually find anecdotally is the people who are more intimately familiar with all of the tools in the ecosystem are less likely to be all in one buyers. And, and the platforms that are marketing themselves as the all in one solution, they're very, very appealing to the less informed buyer because those folks usually aren't aware of the upside and the nuance and how like a specific workflow tool is doing that thing fundamentally better. Taking tax intake as an example, there is not a practice management system available today that does a version of tax intake that is any better than canned questionnaires that best case scenario roll forward answers from the prior year. They're not questionnaires that are actually being feeded by pro forma data from the tax software. Now that's all changing and it will change. And when you run out to a standalone tool that does this one thing in a novel way that like the, the cycle is always the same here where you have, you know, whether it was receipt bank back in the day, whether it was uncat, whatever that cool novel new feature is, you're like man, this is really cool. And you go back to your all in one platform. And you say, hey, can you build this for me? Because I love it. And they're like oh yeah, we'll have that in nine months. And then 18 months later they ship quote it the feature. And I mean we've all seen this a hundred times. The actual implementation is usually very basic. It's a V1. And in that 18 months the workflow tool that nailed it and was the bar has now raised the bar. So when that system comes out with their version of it 18 months down the road, the bar has been raised for how good this can be. And so if we bring this back to let's talk tax intake and then we'll talk month end close automation. If we bring this back to tax intake, every practice management system that is targeting tax firms is saying this exact thing. We're working on it, we're going to have that. And so you go to your, your rep for whatever the platform is, of course they're going to say like yeah, no, that's really cool the stuff that they're doing and, and we're going to have our own version of it and it's all going to be in one place and you're not going to have to manually move things from A to B and it's just going to be so much better and, and well integrated. But you know what hasn't happened yet? A single one of them actually shipping it. And I don't buy software based on things that people tell me that they will have. That's just not a thing that you do. And even if even like and let's be realistic about how exceptionally unlikely this is. If you take the platforms that have pushed the envelope the furthest for tax intake right now it's probably Sorban Stanford Tax and Safe Send if they are the gold standard right now, let's be real. It is exceptionally unlikely that any practice management system has a version of tax take that is as good as those tools are right now, 12 months from now, like one year down the road, it's very unlikely that they have gotten as good as these other tools are today because these other tools have been working on this for years now. Maybe you could say that the PMs have been working on this for years and when they ship it, it's, it's going to be amazing. But I mean really put your finger on examples of that happening in the past. As all in one providers go, it is very hard when you got a big old ship that does a whole bunch of things. It's much Harder to get new functionality out than if you're a new scrappy company that's like, hey, we do this thing that's totally different than what your PM does and it's better and we're going to keep iterating on it and improving on it. That is a much more agile company that can normally ship things faster. Now maybe there will be exceptions to this rule and I mean every one of your PMs, they will all have an answer for like oh no, we have x hundred number of of developers. Which by the way, having a huge number of developers more often slows things down than it does actually speed things up. It's much less cohesive. You have a whole bunch of different brains doing different things, working in different directions. It can be fine. And so you can't totally generalize that. But just know when you go to your PM platform and you say, boy, I would love to have this thing, they're going to tell you exactly what you want to hear. But what's the cost of blindly trusting that? To me, the cost of blindly trusting that is the workflow opportunities that you miss today. The fact that today there's already a better solution for tax intake, there's already a better solution for month end close automation. And if I don't lean into that right now, then I'm literally losing time day over day, like just making the bet that a PM is going to like come out and somehow ship something presumably even better than the tools where that's literally all they do and all they think about all day and all that they work on. That's exceptionally unlikely. And everybody comes down in different places and assigns different premiums to the value of all in one versus integrating best of breed and like different domains, all in one is more relevant and more compelling when innovation stagnates. So when there isn't cool new stuff happening, then you get all in one. And I would argue the last five years there has actually been a lot of stagnation, not a lot of very cool innovation in accounting tech. And it's why practice management systems now all look the same. If people were doing all sorts of wild, cool, different unique things, all those PMs would look different. But. But they don't. They've all like kind of settled into a very common feature set. And it's because over the past five years not all that much has been happening. But now when you've got a platform like Keeper that's doing month end close automation really well, Sorban that's doing all sorts of like tax, workflow, automation stuff really? Well, all of a sudden these practice management systems are having to ask some hard questions around who are we for? Because right now if we build something for tax firms, is that going to alienate the bookkeeping firms that we have or vice versa? If they go all in on month end close automation or if they go all in on US tax stuff, is that going to be a signal that that platform is only for US firms and not for international firms? It's forcing PMs to make some hard decisions. But in all likelihood, as long as innovation continues, even when they ship that stuff, the bar will have been raised. So in periods where there's really cool new innovation happening, rapidly all in one solutions get less compelling. And so the bigger question is what period are we in? Are we in a boring period where there's not much innovation happening and the rate of change is slow, or are we in a very exciting period where lots of change is happening, people are innovating, we're seeing new stuff. I personally, I think the answer there's pretty obvious that the next few years are going to be pretty wild. And that's usually not good for all in one platforms. And I like, I want to have a single tool to rule them all as much as anybody else. If I'm, if I'm wired different, I think it's probably due to my proximity to like the cool new innovative stuff happening where like when companies ship new stuff, they send me an email because they want me to promote it for them so I get to see the cool things they're doing. They tell me about the stuff that's kind of in the pipeline that I can't talk about. We are in an era of like rapid innovation. This episode is sponsored in part by Live Flow. Hey, it's New Year's time. People turning up to, to the gym in record numbers. And if you ate like I did over the holidays, oh boy, is it, is it time to cut back? I'm not proud. But you know one area of our firms that we don't talk about being lean enough with the information we put in front of our clients, Good golly, the reports we run from our tax software, from our accounting ledgers. You actually think that clients look at that? They sure don't. I can't even get them to read my email, let alone go through a 60 page report. And so if that balance sheet and profit loss is not something that your client's actually gonna make sense of or God forbid, the report from, I don't know your tax planning software, your bna? Gross. If they're not gonna make sense of that, maybe it's time for a better way to put information in front of your client. AKA Lifestow's new financial dashboards. They can be as sweaty or as simplified as you like. You can connect them with a QBO or a zero file so they'll pull that data in automatically and you can augment them with any sort of additional information you want to I'm a big notion nerd. It's the closest thing I've seen to notion for financial stuff. Pretty cool. We did actually a demo of the new financial dashboard stuff on the YouTube channel recently. Just go search Jason on Firms Live Flow simple financial dashboard YouTube video. Just pop that in the YouTube search bar. You'll find it. Or check out the link down in the Show Notes this episode is sponsored in part by Financial Sense. If you were plugged into my 2025 practice management system recommendations, you would have seen Financial Cents on the list. I know a bunch of really smart firms that run Financial Sense. I have. I've been on record as saying it is arguably the best small firm all in one. Er, right now it's really hard to have a PM that does both tax tax and accounting work well. And while I'm not a believer in all in ones that do everything from tax intake to nailing proposals and all of that, what I am a fan of is the platforms that get closest to that. Right. Because at the end of the day I do want all in one and I also want them to be investing in a more all in one path to where maybe right now that feature isn't good enough for me to replace that other tool, but I could see how two or three years down the road it is. I want that as opposed to the platforms that aren't investing in that way. Right. Financial Cents has actually absolutely been crushing their marketing the last couple of years. They run an annual thought leadership event for accountants. It's really good that I've been a part of. They're putting out actually really good social media thought leadership as well. Not just around like buy my product, but around better ways to run small firms. And those are the brands I want to get behind. Like those are the brands I want to work with. They got a smart vision for the right way to do it and the product's going to be a reflection of that. Learn more about Financial Sense. Check out the link down in the Show Notes. So to bring this full circle to the question, thoughts on financial sets for Tax intake. I love Financial Sense. Financial Sense was one of my most recommended best all in one platforms in my practice management system recommendation stuff. But Financial Sense sucks at tax intake the same way that every other practice management system sucks at tax intake right now. It just does. And if what I do is tax work and a huge percentage of my time goes into the actual doing of the taxes and the gathering of information, I mean, in my tax room we spent at least 30% of the time on those engagements tracking down information. Unfortunately, and this is, this is around 1040s mainly. So if a tool effectively automates like 80% of that intake process, then even though there are really annoying integration headaches, and it may mean that I have to take information from one system and go manually put it in another, I still saved that 30% of time. And do I want them to integrate perfectly? I absolutely do. I super do. But manual processes, I've talked about this before. I think there's actually too much shade on manual processes right now. Too often we'll try to automate something and we don't get there and we abandon the project and then there's just no system. And then it's like, well, it still has to be somebody's job to make sure that information goes from A to B or you're buying a new tool. And you see, you see the systems that that tool integrates with. And because there's one tool that integrates with your pm, you immediately latch on to that one when it's like, no. What's actually the fundamental problem that this tool is solving and does it solve it as effectively as the alternatives? The integration is a factor in the total calculation, but it is not the only factor, as evidenced by your tax prep software vendors telling you, well, we've got the only practice management system that integrates with your tax software. Problem number one, the platform sucks. The fact that it integrates doesn't make it a good software platform. And problem number two, can you really call that an integration? Right. Like, not all integrations are made the same. So oftentimes integrations are like paper thin and you're like, oh no, this actually sucks and isn't really saving me any time. I've had a bunch of conversations on this lately with now at least half of the CEOs from the PMs that I have on my recommendation list. I've had this discussion with and everybody's more or less on the same page about what's happening in the space and that workflow tools are pushing PMs which is really good. But the reality is if you're an all in one tool, it's really hard to do everything. It's really hard to do month end close automation perfect and tax intake perfect and all these different things. Like we all want everything to work perfectly in one system. And like real talk, zooming out, looking at what PMs are today, five years ago it would have been amazing. You're like, are you kidding me? Like it's file management, it's project management, it's time and billing, it's a portal. Like all of these things done really well in one system. Five years ago that would have been incredibly impressive, but now it's table stakes. And so what we're impressed by now is that that boundary, that innovation is happening from the non all in one providers and what we've got from them now, it will be table stakes in a few years time and these PMs they are going to build that functionality. But do we think that in that time there will be more new stuff, more cool stuff? I would hazard a guess in the age of AI, with everything that's happening right now, there's going to be a whole lot of really cool stuff. And it's why this year my recommendation for the first time ever was that like you absolutely need to have a standalone tax intake tool because the upside is, is so significant and I understand the integration complications and how that's a pain. This is why I never made this recommendation in the past, but because the tools have gotten so good right now, really like the ability of AI to automatically sort through information for you and determine what you have and what you don't have and automatically follow up with clients because that's gotten just so, so juicy. I've told people like you really you need to have this and I get the downsides and that's annoying and I wish it wasn't that way, but you need to have this now. Similarly, on the workflow automation standpoint, if you are a bookkeeping heavy firm, it's really hard to imagine not using Keeper. And so the same thing is happening on the PMs that are more accounting leaning is Keeper has a really unique feature set and I think there's aspects of what Keeper is doing that you're going to begin to see more and more in other practice management systems. Because like the elephant in the room here is what happens as soon as these workflow tools start shipping practice management features. It can be done for the same reason that all the other PMs are starting to look the Same, but now, like, they're doing a whole different level of workflow than the practice management systems are doing. And you've probably got a greater degree of trust in those new workflow tools that they're going to meaningfully lean into AI because they're already doing some kind of cool stuff with AI that we haven't seen from most of the practice management systems. All of this, this whole conversation, everything, it's great for accountants. And like, at the end of the day, I work for accountants, I don't work for software companies. And this, this debate, this, like friction and excitement over can you really do all in one? Can you not do all in one? It's all a net win for accountants. And so I love seeing it, I love seeing people disagree about it because it just puts pressure on everybody to be better in support of the accountant. Now, on the subject of practice management systems, I talked about this a bit on social media this last week. I said something basically that at this point, pretty much every practice management setup in a firm needs to have the hand of an implementer involved in it. And there's a growing number of professional PM implementers out there. I have a small number of them that I trust that I'm happy to connect any of you with. Shoot me an email and I can make an intro. Practice management systems, as they've grown over time, they've gotten more complicated, they do more things. And what used to be very simple to sit down and kind of DIY set up yourself has gotten more complicated now. It's not to say that you cannot still DIY set it up yourself, but you know what I've seen a lot of is people using half of the platform for three years or people not being aware of fundamentally different ways that they could set something up that would be better for their firm. And all I mean by this, I guess, is that coming into your PM implementation, which is the most important tool in your firm because it's, it kind of oversees how everything flows through it, right? The implementation of your PM is like the most important software thing to nail in your accounting firm. And for the same reason that we shouldn't be running our firms in a vacuum and not be making friends with other people who run firms and learning for them, learning, you know, what stuff they're trying, what's working, what's not working, we shouldn't be setting up our PM in a vacuum. And so if you have implementers out there that have done this or some degree of support for upwards of 50 accounting firms on your PM platform. Don't you think it'd be worthwhile to have a conversation even if that conversation just ends up being, wow, you nailed it. This is the best implementation I've ever seen. Maybe they'll say that, but they probably won't. They'll probably have a couple ideas and can give you some advice. And isn't that worth having when the PM touches so many aspects of your firm, like it's connected to everything? Right. Highly recommend seeking out that advice and if I can help connect you to somebody, get in touch. Absolutely. Happy to do that. Last thing I wanted to cover today. There's just been a lot of giving airtime to trolls online lately from actually from a whole bunch of people like showing off mean comments and stuff like that. And this is, if I have a concern here, it is that doing so actually scares people who are considering being more out there and kind of makes them think, well, maybe I shouldn't do this because then I'm going to have all these weirdos coming after me. I just think there are just, there's a lot of really broken people out there who don't have anything better to do than try to bring other people down. And like, you know, in your heart of hearts, if you actually dig into that and, and you look at the things that some people write online where it's like, that was a lot of effort that they put into writing that very elaborate, mean thing, you know that like, that is probably not a reasonable person that you would genuinely take feedback from. Now, there are definitely Internet comments that are like, maybe framed in a mean way, but there's a seed of truth in them. And there's a lot of value in being able to extract that and not get too wound up in maybe the packaging being, I don't know, rude or misplaced. But there's so much value. And let me put this through a very specific lens because I am a. I'm a. I'm a white man. Did you notice that? So, so white. Privileged in many ways. And so my relationship to Internet commentaries will not be the same as everybody else's. So I'll. I'll give you that asterisk. But I can tell you that there's tremendous value to being, to just being Teflon and being able to let that stuff roll off of you both online and in person. I had some random dude on the street when I got out of a car because of the car that I was driving. This was in my 20s, spit on my shoes. He was just so bent out of shape. At where I was in life versus where he was at in life that he went out of his way to do that. And that's just a weird person that would do that. Right? But that has nothing to do with, like, Internet trolls. Like, these people will exist everywhere. People will try to bring you down for really weird reasons that have absolutely nothing to do with you. And if you let those people take away your agency, take away your ability to, like, manifest what you want next for yourself, wouldn't that be a bummer? Like, don't you just kind of not want that? So, like, I mean, I am so, so visible in so many places and I get so many mean things thrown at me every single day that it is, like, it is a skill. Like in the beginning, like, yeah, I would have hurt your feelings or something like that. Over time it gets easier, easier. And that's a tremendously valuable skill to learn. Just like managing people. I mean, you manage team members and you'll have underperforming people and you'll sit those people down and that that person will try to talk you into you being wrong. And they're like, no, I'm doing great. I'm doing everything I'm supposed to do and be doing, like, no problems here. And sometimes there will be validity in that. And your job is to, like, filter through. What are they saying that actually is good feedback versus what are they saying that's like, no, you're just not doing your job. Like, you have to deal with that in so many different forms. But to give people a platform that are idiots online, please don't do that. I think people like to do it because it's an easy way to get engagement. But I'll tell you what, it isn't is useful. Don't let, like, the worst of society stand between you and what you want to do. And right now, social media and being visible is too powerful of an opportunity to let somebody else torpedo that for you. Just because, I don't know, they're trolls and they don't have anything better to do. Maybe there's. Maybe for you it's helpful to make a little scrapbook of all the meanest things that people have told you. Maybe that's motivating in some way. I think the more that you can just cruise past that and let that stuff bounce off you, that's actually a really, really valuable skill to develop because it puts you in the driver's seat. Like you're deciding what you're going to do, not letting other people get in the way of being visible, being vulnerable, putting yourself out there, sharing something that you know would have been really helpful for you five years ago. But people may get bent out of shape about it's. It's easier said than done, like, being able to kind of tune out those voices and those concerns. But if you can do it, man, it's so worth trying to develop that skill. Gang. This is a fun week. This is a wild week on social media. You got any questions? Pop those things in the comments. Shoot me an email. Shoot me a DM if you want it to be private. These are always good discussions on Fridays. Any thoughts? Put that stuff down in the comments and we'll see you next week. Take care.